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Apple, Spotify and Deezer seek to cash in on podcast content boom

Latin America becomes a key battleground for global streaming giants as the podcasting industry matures and gains steam amongst more worldwide listeners in the midst of lockdowns

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Podcasts have been around now for more than 16 years, but for hosting companies and content creators seeking to make them profitable, it’s taken a long time to figure out how to monetize all the revenue-generating possibilities. 

As with streaming music and video, there’s money to be made on podcasts through selling subscriptions, sponsorships, affiliate marketing, and exclusive content, but one common sticking point with podcast monetization has been the challenge of podcast ad measurement

Until recently, podcasters might know how many listeners downloaded a particular show, but not have access to key insights about how long they listened, or whether they even had the opportunity to hear ads served up within the podcast episodes. That lack of marketing metrics that are typical with other platforms has made many brands reluctant to invest their advertising dollars. Since podcasts first emerged in 2004, the ability to track and measure podcast engagement has improved significantly as users have shifted from downloading to streaming, and service providers are eager to capitalize on this valuable content. 

It shouldn’t come as any surprise that the number of people listening to podcasts around the globe skyrocketed in the past year as more listeners than ever tuned in looking for news and engaging content while locked down due to the pandemic. That momentum shows no sign of easing up based on industry watcher forecasts.

eMarketer estimates that the number of U.S. podcast listeners will increase by 16% year-over-year to 106.7 million in 2021; weekly podcast listenership has more than doubled since 2016. Podcast ad spending in the U.S. is projected to surpass $1 billion this year. 

READ ALSO: Spotify’s new tie-up to allow listeners in Latin America to play music, podcasts from Facebook app

“Everything tied to music—including (podcast) content—presents huge opportunities for advertisers in Latin America, since many consumers choose to listen to ads in exchange for streaming free digital audio content. Latin America has historically been a very important region for radio consumption. Many users still listen to the radio, but in its digital form instead. This means that old radio spots have gone digital, and digital audio ads have followed suit,” said Matteo Ceurvels, research director for Latin America and Spain at eMarketer. 

Several streaming audio giants are poised to cash in on the podcasting wave. Ironically, Apple is one of the last big names to the party, despite being the first tech giant to launch digital music streaming through its iTunes digital media player in January 2001 and then popularize podcasts via its iTunes app back in 2005. 

READ ALSO: Spotify to raise prices on some plans across U.S., UK and Brazil

The word “podcast” itself is a portmanteau of “iPod” and “broadcast”, yet, until now Apple, one of the world’s most valuable brands, has largely left the podcast market segment to others. But that changed last Tuesday when the company announced the launch of its redesigned podcast app and the arrival of Apple Podcasts Subscriptions, which will let users pay to unlock ad-free listening and exclusive or premium content. 

Apple podcast content creators will have access to new resources and a suite of applications to support and promote their work, including subscription and marketing tools and listener analytics.  According to The Wall Street Journal, podcasts’ creators pay Apple $19.99 a year to activate the option and it takes 30% of subscription revenue in year 1, and 15% thereafter. 

Apple is looking to woo listeners away from Swedish market leader Spotify, which began shaking up the podcasting industry back in 2019 with a flurry of multimillion dollar acquisitions and investments.

READ ALSO: Spotify buys Locker Room app’s maker Betty Labs in live audio push

Spotify seems to be leading the way until now

After gobbling up smaller networks Anchor, Gimlet Media, Parcast and the Ringer to expand its library, Spotify went on to ink several exclusive content deals with major brands and influencers, including Kim Kardashian West, DC Comics, Michelle Obama and even The Duke and Duchess of Sussex. Spotify even scored exclusive rights to Joe Rogan’s podcast, one of the world’s most popular shows worth an estimated $100 million on its own. 

Spotify currently hosts more than two million podcasts, and generated $9.6 billion in sales last year. The company ended 2020 with over 65 million monthly active users (MAUs) in Latin America, which makes up 22% of its 299 million MAUs around the globe. At its StreamOn press event back in February, Spotify announced plans to launch its own ad network to support podcast revenue generation and new tools for podcasters to sell subscriptions to listeners. Three days ago, it also said that it will launch a subscription modality only for podcasts next week.

Furthermore: Spotify announced that it will return 100% of subscription fees to partners. To be clear: unlike Apple, Spotify will not capture any portion of the podcast subscription revenue.

Spotify will also expand its reach into 80 new markets across Asia, Africa, the Caribbean, Europe and Latin America this year, bringing it to a total of more than 180 listening markets once completed.

French challenger Deezer is heavily betting on local partnerships to win over Latin America

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While Spotify remains the dominant player globally for audio streaming, French challenger Deezer is betting on local tastes and unique partnerships, such as the retailer Magazine Luiza and telco TIM, to reach more streaming audio listeners in Latin America and beyond.

READ ALSO: Apple goes to battle with Spotify in premium podcast push

 “Although we are a global company, we have a very strong local presence. We value national artists and genres, and that makes perfect sense, because Brazilians, for example, listen to national music a lot more. We are always launching new content to promote artists and highlight independent content producers. Brands are also using Deezer to promote themselves in a different manner inside the platform. This is the case of Magazine Luiza which has launched the Decifrei platform, a music e-commerce tool inside Deezer that offers clients the same or similar instruments used to record many national and international hits,” said Marcos Swarowsky, Deezer’s regional managing director for Latin America.

Like Apple and Spotify, Deezer is taking steps to monetize its expanding podcast market, especially after its user base of monthly active users listening to podcasts grew by a whopping 80% last year. 

80% growth

That’s what Deezer added in Brazil’s user base of monthly active users listening to podcasts

“This year we are growing our team in Brazil from three to six people to oversee podcasts in Brazil. [Our] main models for commercial engagements with podcasts are still the production of original content, sponsorships and endorsements,” said Swarowsky. “We keep investing in original and exclusive content such as ‘Céu da Semana,’ ‘Essenciais,’ ‘Só Acho Engraçado Que‘ and ‘Universo Sertanejo‘, plus we are launching at least 10 more original podcasts by the end of the year.”

“Besides that, our partnership with [Netflix competitor] Globoplay involves the launch of a new and exclusive co-created podcast. [Another] highlight was the launch of Analytics by Deezer, a mobile application that provides an instant overview of performance for content creators to know the success of each episode created. There is a lot more to come in the next few months,” said Swarowsky.  

But will all those ad dollars podcasters and service providers have been dreaming of actually materialize? 

“Though advertisers working with this emerging format have seen positive results, digital audio advertising still has a long way to go before it can take a significant amount of share away from more popular digital ad formats like social media or digital video. This is especially true in Colombia. The Interactive Advertising Bureau Colombia (IAB Colombia) found that despite digital audio’s impressive growth in recent years (albeit from a smaller base of digital dollars), digital-audio outlays only accounted for a small proportion (0.5%) of total digital ad spending. By comparison, digital video and social media represented 28.2% and 28.4% of total digital ad spending, respectively,” Ceurvels said. 

Given that, there is still a long way to go for the podcasting business around the world to catch up with other forms of digital streaming.